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Who are the Iranian Sanctions Violators Pardoned on Implementation Day?

February 16, 2016

Publication Type:

International Enforcement Actions

Author:

Simon Chin and Valerie Lincy

On January 17, 2016 – the day after implementation of the nuclear deal with Iran – President Barack Obama announced the details of another agreement with Iran: four Americans who had been detained in Iran were released, and, in exchange, clemency was granted to six Iranian-Americans and one Iranian serving sentences or awaiting trial in the United States.

President Obama said that the Americans, including Washington Post journalist Jason Rezaian, had been “unjustly detained by Iran,” and called the exchange “a one-time gesture to Iran given the unique opportunity offered by this moment and the larger circumstances at play.”[1] Federal prosecutors, in a subsequent court filing in one of the cases, echoed the President’s language, stating that the deal was “a one-time, unique agreement based on extraordinary circumstances.”[2]

In his statement, the President emphasized that the individuals granted clemency in the United States "were not charged with terrorism or violent offenses.” Indeed, all but one case related to violations of U.S. export control laws and sanctions on Iran. As part of the exchange, the United States also agreed to drop charges and remove Interpol arrest notices (“red notices”) against fourteen Iranians who had been fugitives from prosecution in the United States and whom the U.S. government had not been able to locate or extradite. These fourteen Iranians were all facing charges related to sanctions violations.

In their February 1 court filing, prosecutors explained that the President's actions would not "in any way impact how the Department of Justice prosecutes future cases involving citizens of Iran or any other country who violate the domestic laws of the United States. This includes individuals who violate the United States trade embargo on Iran, which remains in place with the exception of a few activities that will be licensed by the United States Department of Treasury.”[3]

The U.S. government’s statements notwithstanding, observers have raised concerns about the potential precedent set by the exchange. David Locke Hall, a former federal prosecutor who worked on cases involving illicit Iranian procurement, argued in the Wall Street Journal that the deal “diminishes any deterrent effect [the pardoned men’s] arrests and convictions may have had. It also erases years of hard work by investigators and prosecutors.”[4] Mr. Hall also wrote that “the administration’s actions send a clear signal to federal agents and prosecutors that their labors produce nothing more than political capital, to be traded away when it is politically expedient.” As a result, he warned, future prosecutions of export-enforcement cases—which “are always difficult and labor intensive”–may be less likely.

The export violations committed, or allegedly committed, by the individuals granted clemency as part of this exchange are described below.

Bahram Mechanic: A dual U.S. and Iranian citizen who allegedly was involved in a procurement network that supplied U.S.-origin microelectronics, including items with applications in surface-to-air and cruise missiles, to end users in Iran. Mechanic was the majority owner and Chairman of the Board of Faratel Co., located in Iran, and the majority owner of its sister company, Smart Power Systems Inc., located in Houston, Texas. According to the indictment, Mechanic placed order requests for the sensitive electronics with Arthur Shyu and his company, Hosoda Taiwan, who then procured the items and shipped them either directly to Iran or through Turkey via Golsad Istanbul Trading. The end user in this network was allegedly Faratel, which designs and produces uninterruptible power supplies, including for the Ministry of Defense, Atomic Energy Organization of Iran, and Iranian Centrifuge Technology Company. Mechanic was indicted on 22 counts related to sanctions violations and money laundering in 2015. He had pleaded not guilty and had been held in a Houston jail awaiting trial.

Tooraj “Roger” Faridi: A dual U.S. and Iranian citizen who was a co-defendant in the Mechanic case. He was a vice president of operations at Smart Power Systems and an engineer at Faratel. Prosecutors alleged that Faridi assisted Mechanic by processing orders from Faratel, organizing the procurement network, and procuring and shipping export-controlled items to Faratel in Iran. Faridi also allegedly directly shipped controlled items from Smart Power Systems in the United States to Faratel in Iran. He was indicted in 2015 on three charges related to sanctions violations. Faridi had pleaded not guilty and was free on bail awaiting trial.

Khosrow Afghahi: A dual U.S. and Iranian citizen who was also a co-defendant in the Mechanic case. He was the managing director and part owner of Faratel and the minority owner of its sister company, Smart Power Systems. Afghahi also assisted Mechanic in operating the procurement network. In 2015, Afghahi was indicted on four criminal charges related to sanctions violations and money laundering. He had pleaded not guilty and had been held in a Houston jail awaiting trial.

Nader Modanlo: A dual U.S. and Iranian citizen who was convicted in 2013 of conspiracy to defraud the United States, violating the Iran Trade Embargo, and money laundering. Between January 2000 and November 2007, he conspired to supply Iran with satellite technology and hardware. He facilitated contact with POLYOT, a Russian government-owned aerospace enterprise, which led to the launch of an Iranian satellite from Russia on October 27, 2005. He had served as chairman and managing member of New York Satellite Industries, LLC, which received $10 million from a front company, Prospect Telecom, as consideration for facilitating the agreement between Iran and POLYOT, as well as for providing telecommunications services as part of that agreement. Modanlo was released from a federal prison in Virginia on January 17, 2016, where he had been serving an eight-year prison sentence.

Ali Saboonchi: An Iranian-American who was convicted in 2014 of attempting to export industrial parts to end-users in Iran via transshipment through the United Arab Emirates or China. He was the founder and operator of Ace Electric Company in Maryland and was charged with being part of a procurement network that sought industrial parts and components for Iranian customers. He was convicted on eight criminal counts related to sanctions violations in 2014 and was serving a two-year sentence in a federal prison in Virginia. He was released on January 17, 2016.

Arah Ghahreman: An Iranian-American who was convicted in 2015 of trying to acquire U.S.-made navigation equipment for end-users in Iran. Prosecutors argued that Ghahreman acted as the procurement network’s agent in the United States and sought to acquire the U.S.-origin goods for illegal export. He had been serving a 78-month sentence before his release in January 2016.

Nima Golestaneh: An Iranian national who pleaded guilty in 2015 to charges related to his involvement in the October 2012 hacking of a Vermont-based defense contractor. He was arrested in Turkey in 2013 and extradited to the United States in 2015. According to his plea agreement, Golestaneh was part of a conspiracy to hack the computer network of Arrow Tech Associates Inc. in Vermont in order to steal information. Golestaneh admitted that he acquired servers in other countries in order for his co-conspirators to launch the attacks while masking their identity and location. He had been held in a New York jail awaiting sentencing before he was freed.

The export violations allegedly committed by the individuals located outside the United States against whom charges were dismissed are described below.

Alireza Moazami Goudarzi: An Iranian citizen who allegedly attempted to export military and civilian aircraft parts from the United States to Iran. According to prosecutors, these included parts for an attack helicopter and for military aircraft. In 2012, Goudarzi was charged with six criminal counts in the United States related to sanctions violations and money laundering. He was arrested in Kuala Lumpur, Malaysia by Malaysian authorities, pursuant to a provisional arrest warrant, but was subsequently released from custody. The United States has since not been able to locate Goudarzi. On January 19, 2016, prosecutors filed a request to dismiss all charges against Goudarzi. The judge in the case asked that prosecutors explain the “significant foreign policy interests” that justify dropping charges. Prosecutors submitted this explanation on February 1, 2016, and the case is still pending.

Matin Sadeghi: A Turkish national who was a co-defendant in the Mechanic case. He operated Golsad Istanbul Trading Ltd., a shipping company located in Istanbul, Turkey that allegedly served as the transshipment point for dual-use U.S.-origin electronics exported illegally to Iran. Sadeghi allegedly acted as a “cut out” for Mechanic’s procurement network, allegedly received shipments from Arthur Shyu in Taiwan and sending them to Faratel in Iran. In 2015, Sadeghi was charged with six criminal counts related to sanctions violations. The charges against him were dropped on January 19, 2016.

Seyed AbolfaziShahab Jamili: An Iranian citizen who allegedly operated an import-export business in Iran that procured nuclear-related equipment via China. Jamili was the operator of Nicaro Eng. Co., Ltd., a Tehran-based company used to ship parts into Iran. U.S. prosecutors alleged that between 2005 and 2012, Jamili purchased thousands of Chinese manufactured parts with nuclear applications from Sihai Cheng, a Chinese national. The end-user of these parts was allegedly Eyvaz Technic Manufacturing Company, an Iranian company that remains blacklisted by the United States and the European Union. Jamili also allegedly conspired with Cheng to obtain U.S.-made pressure transducers—equipment that can be used in gas centrifuges for uranium enrichment. Jamili was charged with ten criminal counts in 2013. All charges were dropped on February 3, 2016.

Koorush Taherkhani: An Iranian citizen who allegedly used his Dubai-based firm, Tig Marine Engineering Services, as a front company to acquire U.S.-made navigation equipment for end-users in Iran. In 2013, Taherkhani, along with his company and two other employees of Tig Marine, were charged with nine criminal counts related to Iran sanctions violations and money laundering. The charges against Taherkhani and Tig Marine were dropped on January 21, 2016. This was the same case involving Arah Ghahreman, whose sentence was commuted by President Obama.

Jalal Salami: A dual U.S. and Iranian citizen and owner of Pastek Solutions, a company located in San Marcos, California. He is alleged to have been involved in a conspiracy to procure electronic components from the United States for end-users in Iran through transshipment in Malaysia. In 2011, Salami was charged with 29 criminal counts related to the alleged conspiracy. The charges against Salami were dropped on January 15, 2016.

Sajad Farhadi and SeyedAhmad Abtahi: Farhadi and Abtahi are both Iranian citizens who were allegedly involved in the same conspiracy as Salami. They both worked for SunSem Sdn, Bhd., a company located in Kuala Lumpur, Malaysia, which allegedly served as the transshipment point for U.S.-origin electronic components en route for Iran. Farhadi oversaw the daily operations of SunSem in Malaysia, while Abtahi helped managed SunSem operations from Iran and allegedly identified the specific electronic components to be purchased from U.S. companies. They both faced 13 criminal counts. The charges against Farhadi and Abtahi were dropped on January 15, 2016.

Amin Ravan: An Iranian citizen alleged to have smuggled military antennas from the United States to Hong Kong and Singapore. In 2011, Ravan and his Iran-based company IC Market Iran were charged with three criminal counts. According to the indictment, Ravan worked with Singapore-based Corezing International in order to acquire the antennas and disguise their intended destination in Iran. Ravan was arrested in Malaysia in 2012 and U.S. authorities had sought his extradition. The charges against Ravan were dropped on January 26, 2016.

Behrouz Dolatzadeh: An Iranian citizen who allegedly conspired to purchase U.S.-made assault rifles and import them into Iran. Dolatzadeh was charged with two criminal counts in 2012. According to the indictment, Dolatzadeh, who was working for Tehran Fanavar International Group, agreed to purchase thousands of assault rifles, via transshipment through Syria, from a federal agent posing as a sales representative in January 2011. Between October 2011 and January 2012, he also sought to purchase additional assault rifles via the Czech Republic. According to Reuters, Dolatzadeh was appointed to the boards of three technology companies linked to a conglomerate, Setad Ejaiye Farmane Hazrate Emam, which is controlled by Iran’s Supreme Leader. Dolatzadeh was reportedly indicted in 1995, in a separate case involving the attempted export of U.S.-made radio equipment to Iran.[5] He was initially convicted in a Czech court on local charges of arms smuggling and sanctions violations but was freed after a Czech appeals court overturned the conviction, ruling that the case had been entrapment. The U.S. charges against him were dropped on February 1, 2016.

Hamid Arabnejad, Gholamreza Mahmoudi, and Ali Moattar: Three Iranian citizens who held positions at Mahan Air and were alleged to have conspired to import U.S.-made Boeing aircraft into Iran on behalf of their company. Arabnejad (managing director), Mahmoudi (vice president of business development), and Moattar (consultant to the managing director) were charged along with Mahan Air with two criminal counts in 2014. According to the indictment, the three Mahan Air officials used a front company to obtain three Boeing airplanes on behalf of Mahan Air through a leasing arrangement. Mahan Air also sought to obtain three additional Boeing planes using a similar arrangement with an airline in Iceland. The charges against the three were dropped on January 20, 2016.

Mohammed A. Sharbaf (aka Mohammad Ali She’rbaf): An Iranian citizen alleged to have conspired to procure U.S.-origin forklift parts in violation of U.S. sanctions. Sharbaf was charged with six criminal counts in 2005. According to the indictment, Sharbaf, president and managing director of Sepahan Lifter Company—a forklift company based in Esfahan, Iran—sought to import forklift parts from the United States via Dubai-based Sharp Line Trading, owned by Khalid Mahmood. The charges were against Sharbaf were dropped on February 4, 2016.

Mohammad Abbas Mohammadi: An Iranian citizen who allegedly conspired to procure U.S.-origin aircraft parts for use in civilian and military aircraft and export those parts from the United States to Iran. Mohammadi was charged with eleven criminal counts in 2013, including violations of the International Emergency Economic Powers Act, Iranian Transactions Regulations, and the Arms Export Control Act. According to the indictment, between March 2011 and December 2012, Mohammadi conspired to procure American-made aircraft parts and engines for Iranian Aircraft Industries—an entity controlled by the Government of Iran—for use in the Iranian government’s military and civilian aircraft fleet. The conspiracy involved an unnamed Turkish company used for transshipment and two procurement front companies for Iranian Aircraft Industries in Iran: TEM Co and ERI. The charges against Mohammadi were dropped on January 19, 2016.